White Paper

Establishing new Distribution System Operator (DSO) functions that include an open and transparent distribution market is the next evolutionary step required to create a “new energy” economy that empowers utilities, consumers, producers, third-party aggregators, technologists, and new business models to enable more DER adoption and creating greater efficiencies, cleaner and cheaper power, better reliability and more resilience.

While working on a DSO strategy for a California IOU this Fall, I spent a couple of weeks reading everything I could find on DSO modeling. Frankly, there isn’t much out there. And, what I did find, I walked away a bit confused – even after reading some of the papers multiple times. I spent hours at the whiteboard drawing what I thought I had read and had the epiphany that THERE ISN’T JUST ONE DSO MODEL that works for everyone. Instead, there is a spectrum of potential DSO models ranging from highly centralized transmission level models to highly decentralized peer-to-peer level models. Over this spectrum, there are other models that fall in-between. And, when we think about a DSO, we shouldn’t think of it as an organization. Rather, the DSO is a set of roles that may be in one organization or spread across multiple organizations. And, finally, that how you model a DSO (and distribute the roles) in one region should be designed based on local conditions – regulatory environment, DER penetration, weather, politics, bulk market design, grid topography, constraints, and capabilities, etc. – meaning that one DSO model that fits well in one area might not be the optimal DSO model in another area.

As a result of this, my B&V team developed a structured process for working with experts within utilities to optimize a DSO model design and strategy for the California utility we were working with. After completing the modeling workshop, I developed a white paper on what I had learned to help other utilities gain a perspective on the spectrum of DSO model opportunities and to help them determine which model(s) best fit their situation.

The bottom line is that there is not ONE ANSWER for the “best” DSO model. There is an informed process that should be followed – and a clear spectrum of possibilities that should be considered thoughtfully. I hope that this paper will help utilities, regulatory bodies, and ISOs wrap their heads around the problem with a little more clarity and consider all of the possibilities before “jumping to the answer”.

The DSO functions and different models described in our document lay the foundation for considering how to enable a “new energy” economy ecosystem from an organizational standpoint based on your local politics, regulatory environment, grid constraints, and other local considerations.

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